German government’s lignite contract offers possibility for earlier coal exit – opinion

German media commentators have said that the draft contract between the state and lignite operators presented by the cabinet on 24 June keeps open the possibility for an earlier coal exit than the agreed 2038 deadline. According to the contract, operators will receive the 4.35 billion euros in compensation even if market conditions such as a higher CO₂ price in the EU Emissions Trading System make coal uneconomical, eliminating the incentive to keep units online longer than necessary.

The cabinet decision on the contract between the state and lignite operators has increased the likelihood that plants will come offline earlier than planned, writes Tagesspiegel Background in an editorial. “If the plants remain underutilised, as has been the case recently, this will become increasingly attractive or even mandatory for the operators,” writes Tagesspiegel.
The draft contract leaves open the possibility of a faster coal exit, but pays a heavy price, writes Malte Kreutzfeldt in an opinion in tageszeitung (taz). “The billions for the companies – and the many more which will go to the affected states – seem to be the price that has to be paid to ensure the coal exit can happen now without new conflicts.” He says the coal exit “could be successful after all” should the market and future governments ensure a significantly faster phase-out.
It is “bitter“ for taxpayers that the market could in the end cause a faster coal exit, but billions in compensation will be paid nonetheless, writes Birgit Marschall in Rheinische Post. She warns that the additional billions of euros in funds intended to support coal regions in their transition away from the fossil fuel must be spent right. “It is the imperative task of the states not only to get money from the federal government, but also to finally set up sustainable economic concepts for their lagging regions.”

Germany is one step closer to finalising legislation on the planned coal exit by 2038 at the latest after the government approved a draft contract between the state and companies to flesh out the country’s farewell to lignite. Environmentalists have also noted with relief that the contract in its current form will not prevent an earlier exit from coal should market conditions turn coal plants uneconomical.